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| Summary of Project Information (SPI) |
| This Summary of Project Information is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
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| Project number | 24656 |
| Project name | Zeus Ceramica |
| Country | Ukraine |
| Sector | Nonmetallic Mineral Product Manufacturing |
| Department | Global Manufacturing & Services |
| Company name | CJSC Zeus Ceramica |
| Environmental category | B |
| Date SPI disclosed | December 6, 2005 |
| Projected board date | April 30, 2006 |
| Date revised SPI disclosed | March 10, 2006 |
| Status | Active |
| Previous Events | Invested: October 31, 2006
Signed: June 21, 2006
Approved: May 31, 2006 |
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| Description of company and purpose of project |
| The project is the construction of a greenfield ceramic tile plant, CJSC Zeus Ceramica (Zeus or the Company), with a total annual production capacity of 4.3 million square meters of porcelain (ceramic granite) tiles in Slavyansk, Donetsk region in Ukraine. The Project is being implemented in two phases. The first phase (“Phase I”), the construction and installation of the company’s first line with an annual production capacity of 2.0 million square meters, was completed in March 2005. The second phase (“Phase II”), the installation of another line with a capacity of 2.3 million square meters, is expected to be completed in the first quarter of 2007. |
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| Project sponsor and major shareholders of project company |
The company is a joint venture between CJSC Yuzhno-Oktiabrskie Gliny Yug (“YUG”) (26%) and Emilceramica S.p.A. (“EC”) (74%) (collectively, the “Sponsors”).
YUG is a Ukrainian supplier of clay and kaolin, key raw materials in the production of ceramic tiles. It was started in the early 1990s as a result of the privatization of several entities, including clay and kaolin quarries.
EC: Founded in 1961 by an Italian family in Modena, the center of the Italian ceramic industry, EC is the main entity of the industrial group Speranza S.p.A. (“Speranza” or the “Group”). The Group comprises companies involved in the manufacturing of ceramic tiles (flooring and wall tiles and special pieces), in subcontracting for the ceramics industry and in the quarrying and processing of raw materials. EC, together with its subsidiaries, is the 7th largest tile producer in Italy. |
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| Total project cost and proposed IFC investment |
| The total project cost is estimated at $44 million. The company has requested an IFC loan of up to $8 million. |
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| Location of project and description of site |
| The company’s plant is located in Slavyansk, 650 kilometers east of Kiev. The company is located in close proximity to deposits of clay and kaolin, the key raw materials for ceramic tile production. |
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| Project Development Impact and IFC's Role |
The proposed project is expected to have the following development impact:
- Transfer of Know-How: The project will involve transfer of EC’s first-class production methods and manufacturing best practices, including environmental initiatives and patented production technologies;
- Job Creation and Training: The project will create direct jobs during Phases I and II, additional indirect employment and other benefits including extensive training of Ukrainian staff in Italy;
- Improved Quality: The project will contribute to the rise in standards of the ceramic tile industry in Ukraine and expansion of the market by supplying quality tiles at affordable prices;
- Import Substitution and Cost Reduction: The project will promote import substitution, putting price and quality pressure on local producers, from which customers will ultimately benefit;
- Upstream/Downstream Effects: The project will strengthen local upstream (raw materials suppliers) and downstream (distributors, DIY chains) businesses; and
- Demonstration Effect: The project would provide a significant demonstration effect, as its success would encourage other international companies pursuing investment opportunities in Ukraine, as the country's perceived risk begins to diminish.
IFC’s role in the proposed project is notable in several areas:
- IFC's proposed investment will enable the company to finance its capital investments with long-term funds on reasonable terms otherwise unavailable to the company;
- IFC will play an important role in structuring the financial plan, advising the company on its relationship with other financial institutions, and evaluating the environmental issues, thus reducing the Project's risk profile; and
- IFC will play an honest broker role in the relationship between the Italian and Ukrainian shareholders through advising the company on corporate governance issues. |
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| Environmental and social issues - Category B |
This is a category B project according to IFC's environmental and social review procedure. Environmental and social issues which may be associated with this type of project, and which will be assessed during project appraisal, include: site selection and land acquisition process including any associated resettlement or economic displacement, sustainable raw material supply, fuel selection and air emission control, wastewater treatment, handling of solid wastes and hazardous materials (including glazes and pigments), energy efficiency, development of environmental and health & safety management programs, and employment creation.
To view the environmental documents for this project, click here |
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| Location of environmental documents in locally affected community |
The environmental documents are available at the company’s administrative office at the following address:
7 Goncharnaya St.,
Slavyansk, Donetsk Region,
Ukraine. |
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| To contact the project company, please write to: |
Alexander Bogoslavsky
General Director, CJSC Zeus Ceramica
5 Svobody St., P.O. Box 89
84100 Slavyansk Donetsk Region
Ukraine
Phone: 38 06262 24893/38854/28106
Fax: 38 06262 29812/22784 |
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